Divorcing and need to sell? Here’s what you need to know

The South African divorce rate is over 50% and in most cases the primary asset, beside the question of the welfare of any children that needs to be shared in these matters is an immovable property. “For many South Africans a property is the biggest investment they’ll ever make and as such it makes sense that it is the largest asset that needs to be divided when couples separate”, says Bruce Swain, CEO of Leapfrog Property Group.

How assets, including property, are divided during a divorce depends on what marriage regime, or type of marital contract, the couple registered when they were married.

There are three options:

in community of property,

out of community of property – with the application of the accrual system and

out of community of property – without the application of the accrual system.

Community of property

“It’s important for couples to note that if they fail to enter into an antenuptial contract before getting married they will automatically be married in community of property”, shares Swain. In community of property essentially means that both spouses share in all of the assets and liabilities of their joint estate at the dissolution of the marriage. “In terms of property this means that it doesn’t matter whether the property was bought before the marriage or in whose name the home is registered”, explains Swain, “As such the nett proceeds from the sale will be distributed equally. Barring that one party can also buy the other out, if they can afford to carry the bond after the transfer of ownership”.

It is important to note that customary or traditional marriages have been legally recognised since 2000 with the adoption of the Recognition of Customary Marriages Act (RCMA). According to the Act couples in a traditional marriage are automatically seen as being married in community of property. Couples who are already in a customary marriage can apply to the High Court to change this status.

Out of Community of Property with the Application of the Accrual System

Couples option for this regime need to enter into an antenuptial contract before they get married, and register this at their local Deeds Office within three months of the wedding. Getting married out of community of property, with the application of the accrual system, means that parties are entitled to share in the growth of each other’s estates during the marriage period. When divorcing the amount reflected in the original antenuptial agreement is deducted from the value of the estate to determine the amount to be divided.

“If the home was bought during the course of the marriage it has to be sold, with the nett proceeds split between the couple, or either party can buy the other out”, shares Swain. Should the couple choose the latter option it’s good to know that transferring half the share of the property is exempt from transfer duty.

Swain explains that; “This situation only applies when the property was bought during the marriage. If the home was purchased before the marriage and was not excluded in the antenuptial contract, or if it was bought after the marriage and it was only registered in one spouse’s name then the nett value of the property will go exclusively to that spouse”. Naturally this will affect the accrual of the joint estate.

Out of community of property – without the application of the accrual system

Many people opt to enter into an antenuptial agreement, without the application of the accrual system. “Essentially this means that both partners retain the net worth and assets they had before the marriage as well as any accrued during the marriage”, explains Swain.

But what if we agree?

“If both spouses can agree on how they want to divide their assets; and in particular their property then it needn’t be on the basis of their marriage regime”, says Swain,

“However, if an agreement can’t be reached then the property must be divided according to their regime i.e. in or out of community of property, with or without accrual”.

It’s important to note that in the event of a dispute the court has discretion to divide the property as it deems fit, if misconduct can be proven against one of the spouses in the event of proven abuse for example.

“It may seem strange to think about division of assets before getting married, but it’s incredibly important for couples to discuss how their estate will be divided right at the beginning – only doing so in the unfortunate event of a divorce will complicate matters significantly”, advises Swain.